Report Title:

Real Property; Covenants

 

Description:

Prohibits a deed restriction or covenant that requires a transferee of real property to pay a transfer fee to the person imposing the deed restriction or covenant, in connection with a transfer of real property.  (SD1)

 


THE SENATE

S.B. NO.

1241

TWENTY-FIFTH LEGISLATURE, 2009

S.D. 1

STATE OF HAWAII

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO REAL PROPERTY TRANSACTIONS.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  Chapter 502, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§502‑    Prohibition of transfer fees; covenants.  (a)  A deed restriction or other covenant running with the land applicable to the sale of residential real property that requires a transferee of residential real property, or the transferee's heirs, successors, and assigns, to pay to a declarant or other person imposing a deed restriction or covenant on the property or a third party designated by a transferor of the property, a fee in connection with a future transfer of the property shall be prohibited and unenforceable.  A deed restriction or other covenant running with the land that violates this section, or a lien purporting to encumber the land to secure a right under a deed restriction or other covenant running with the land that violates this section is void and unenforceable.

     (b)  This section shall not apply to any of the following fees or charges required by a deed restriction or other covenant running with the land in connection with the transfer of residential real property:

     (1)  Any interest, charge, fee, or other amount payable by a borrower to a lender pursuant to a loan secured by residential real property, including any fee payable to the lender for consenting to an assumption of the loan or transfer of the residential real property, for providing an estoppel letter or certificate, or for any shared appreciation interest, profit participation, or other consideration payable to the lender in connection with the loan;

     (2)  Any fee or charge payable to a residential real property homeowners' association, condominium association, cooperative association, or property owners' association pursuant to a declaration, covenant, or law applicable to the association, including a fee or charge for association records for the owner of the residential real property or to provide an estoppel letter or certificate;

     (3)  Any fee or charge payable to a landlord under a lease of residential real property, including a fee or charge payable to the landlord for consenting to an assignment of the lease, for providing an estoppel letter or certificate, or to change the landlord's records as to the owner of the lessee's interest in the lease;

     (4)  Any consideration payable to the holder of an option to purchase an interest in residential real property or the holder of a right of first refusal or first offer to purchase an interest in residential real property for waiving, releasing, or not exercising the option or right upon transfer of the residential real property to another person; or

     (5)  Any fee or charge payable to a government entity.

     (c)  As used in this section, unless the context requires otherwise, "residential real property" means fee simple or leasehold property on which is currently situated:

     (1)  From one to four dwelling units; or

     (2)  A residential condominium or cooperative apartment primarily used for occupancy as a residence."

SECTION 2.  Chapter 518, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§518-    Prohibition on transfer fees; covenants.  (a)  A deed restriction or other covenant running with the land applicable to the sale of residential real property that requires a transferee of residential real property, or the transferee's heirs, successors, and assigns, to pay to a declarant or other person imposing a deed restriction or covenant on the property or a third party designated by a transferor of the property, a fee in connection with a future transfer of the property shall be prohibited and unenforceable.  A deed restriction or other covenant running with the land that violates this section, or a lien purporting to encumber the land to secure a right under a deed restriction or other covenant running with the land that violates this section is void and unenforceable.

     (b)  This section shall not apply to any of the following fees or charges required by a deed restriction or other covenant running with the land in connection with the transfer of residential real property:

     (1)  Any interest, charge, fee, or other amount payable by a borrower to a lender pursuant to a loan secured by residential real property, including any fee payable to the lender for consenting to an assumption of the loan or transfer of the residential real property, for providing an estoppel letter or certificate, or for any shared appreciation interest, profit participation, or other consideration payable to the lender in connection with the loan;

     (2)  Any fee or charge payable to a residential real property homeowners' association, condominium association, cooperative association, or property owners' association pursuant to a declaration, covenant, or law applicable to such association, including a fee or charge for association records for the owner of the residential real property or to provide an estoppel letter or certificate;

     (3)  Any fee or charge payable to a landlord under a lease of residential real property, including a fee or charge payable to the landlord for consenting to an assignment of the lease, for providing an estoppel letter or certificate, or to change the landlord's records as to the owner of the lessee's interest in the lease;

     (4)  Any consideration payable to the holder of an option to purchase an interest in residential real property or the holder of a right of first refusal or first offer to purchase an interest in residential real property for waiving, releasing, or not exercising the option or right upon transfer of the residential real property to another person; or

     (5)  Any fee or charge payable to a government entity.

     (c) As used in this section, unless the context requires otherwise, "residential real property" means fee simple or leasehold property on which is currently situated:

     (1)  From one to four dwelling units; or

     (2)  A residential condominium or cooperative apartment primarily used for occupancy as a residence."

     SECTION 3.  Chapter 518, Hawaii Revised Statutes, is amended by amending its title to read as follows:

"COVENANTS IN [LEASES] REAL PROPERTY TRANSACTIONS"

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on November 1, 2009.